Courter v. CytoDyn Inc, 3:21-cv-05190

Plaintiffs (lead plaintiff Brian Courter and a putative class) allege CytoDyn, Inc. and senior officers misled investors about the FDA approval status and efficacy of their drug candidate, Leronlimab, for HIV and COVID-19 treatments.
Plaintiffs claim CytoDyn made multiple materially false or misleading statements from March 2020 to March 2022 to inflate its stock price, while certain officers sold shares for personal profit.
Key alleged misstatements include: representing regulatory filings as "complete" when critical required data was missing, misrepresenting FDA feedback, and portraying failed or inconclusive clinical trials as positive.
Plaintiffs bring claims under Section 10(b) and Rule 10b-5 (misstatement and fraudulent scheme), Section 20(a) (control person liability), and Section 20A (insider trading).
Defendants moved to dismiss based on failure to plead falsity, scienter, loss causation, and pleading standards under the PSLRA and Rule 9(b).
The court decided these issues on a motion to dismiss, accepting plaintiff’s factual allegations as true for this stage.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Falsity of CytoDyn statements	Statements about FDA filings and trial results were materially false & misleading	Disclosures were accurate, context shows no actionable misstatements	DENIED – Plaintiff plausibly pled actionable falsity
Scienter & PSLRA pleading	Alleged facts support a strong inference officers knew/were reckless	Complaint fails to specifically plead strong inference for each defendant	DENIED – Plaintiff meets the heightened standard
Safe harbor / Puffery / Opinions	Challenged statements were factual or mixed/omitted material facts	Statements were forward-looking, opinions, or mere puffery	DENIED – Statements not shielded or inactionable
Promotion scheme & loss causation	Promotion and dissemination of falsehoods, with stock price declines on corrections	Promotion wasn’t separate wrongdoing, no distinct loss causation	DENIED – Promotion scheme claim plausibly pled
Individual/Control person liability	Officers signed off on statements, exerted control	Didn’t “make” statements or control overall actions	DENIED – Plaintiff plausibly pled control/liability
Insider trading	Officers traded while in possession of material nonpublic info	Trades not sufficiently “contemporaneous,” use of 10b5-1 plan	DENIED – Contemporaneous means within days, plan is no defense

Ashcroft v. Iqbal, 556 U.S. 662 (pleading plausible claims required; conclusory allegations insufficient)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (requiring plausible factual allegations to state a claim)
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (courts must weigh competing inferences for scienter at pleading stage)
Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148 (elements of Section 10(b) claim clarified)
Omnicare, Inc. v. Laborers Dist. Council Const. Indus. Pension Fund, 575 U.S. 175 (distinguishing actionable opinions from non-actionable)
Warshaw v. Xoma Corp., 74 F.3d 955 (plaintiff can state a claim based on misleading reassurances after negative data)
Berson v. Applied Signal Tech., Inc., 527 F.3d 982 (misleading if investor would perceive materially different state of affairs)